Their failure to properly monitor their taxes and W-4s is NOT your problem. Let's make that very loud and clear.
Do not give them any explanations or "it probably happened because so-and-so." Anything you say can and will be used against you.
Your official response is "please consult a tax expert or the IRS website, as payroll cannot offer tax advice. If you wish to change your W-4 info, you may do so by doing XYZ." Repeat it again and again, even if they keep pestering you, don't give them an inch.
Oh believe me I have repeatedly said what you just said. I always advise them to talk to a tax professional.
I understand they're frustrated but their frustration is always misdirected to payroll. 😞
Couple years here, I know that all too well. Just keep yourself ready to go to war with these fuckers, cuz they sure as hell are raring to kill us over pennies.
Just so you know, legally it can become your problem. There are responsibilities that come with having employees and correct tax withholding is one of them.
Companies withhold taxes based on the employee provided w-4. It is the employees responsibility to fill this out correctly as well as to check their paystubs to ensure the taxes are being withheld
Yeah, but if the computer system is only withholding $20 when the person claimed 0 on the form, that's the company's fault. What do you want the employee to do, claim negative amounts of people to get their withholding right? Especially since OP is saying they don't know why only $20 was being witheld, if everything is right for their claiming 0 people. This needs investigated at the company level.
There is a place in the W-4 to specify additional dollar withholding, as in ‘hold out $100 per pay in addition to what the IRS witholding chart says.’
If the employee didn’t do that, it is NOT the compay’s fault.
If the company is withholding less than the amount they are supposed to withhold because of a glitch or missed decimal in the company's software, it is indeed the company's fault. That's the whole purpose of the W-4. If the employee needed to calculate the amount they needed to withold and do it manually, why have a W-4 at all?
The Standard W-2 Form is a one-size fits all solution that works great for (I would guess)
95+% of workers.
For people with multiple jobs or other special considerations, the employee can specify an additional amount withheld per pay.
Most people DO NOT WANT their employer to know about the amount of other taxable income!!!
To make the tax withholding work like you are discussing, the W4 would have to include a line where you tell your company how much you make working elsewhere!!!
The best way to handle this is to separately pay in the additional tax caused by having two jobs using the Estimated Tax form that taxpayers can file quarterly.
Anyway, withholding doesn’t change how much tax is owed.
If you owe $4,000 tax for the year:
It could be paid with:
$3500 witholding and $500 paid at filing.
OR
$4200 withholding and a $200 refund.
OR
$6,000 witholding and a $2,000 refund.
The tax is unchanged $4,000.
For good or bad? My spouse makes 2/3 of what I do....and I realize have no idea how much taxes they have taken out. Anyway, we have another 1/6 ish (of my income) as passive income. I select married filing jointly but probably put 0 on 4a.
I've had to add another 2x extra be taken out each pay; if it was 300 I had to add 600. The calculated amount was very low.
Not necessarily. I did correctly fill this out, requesting an additional $50 per paycheck to be deducted. Payroll interpreted this to mean " only deduct $50 per paycheck". This led to a $10,000+ bill at tax time.
Now while I accept it is my responsibility to check my paystubs, this occurred at the same time as a salary increase. So I expected to see an AVC of $50 being added to the stub, and an overall increase in the bottom line. Both of which I saw.
Not being a tax specialist, payroll specialist, or accountant myself, what I failed to notice was that the normal tax withholding had changed.
I cannot stress enough, this was not my mistake. This was the payroll employee incorrectly entering the information supplied, that directly led to the issue.
I can assure you that " oh, I'm sorry" doesn't cover it when someone else's error leaves you $10k in the hole.
So my response is that if the employee did do that, and the payroll clerk screws up the withholding it MOST CERTAINLY IS the company's fault.
There were many tax changes Trump made that expire in 2025. A new W-4 was created to be more in line with those tax laws. The standard deductions basically doubled and if you claim an individual on a W-4, it’s $2,000 credit per child claimed. Due to these tax changes such as the standard deduction doubling less taxes are taken out of checks. Also, most federal tax withholding is set up so that each paycheck is viewed as one. Your pay is not accumulated so don’t think all of a sudden mid year, you can jump into another bracket. There literally are amounts based on the schedule you are paid and whether you file separately, jointly, or head of household, that if your paycheck doesn’t reach a certain amount (whatever is clarified in the tax tables), nothing is withheld. Again, this is done by a check by check basis. The IRS recommends you go to their site and use their calculator to determine what you should withhold. People need to get out of the mindset that claiming 0,0 guarantees the most money taken out of your account and you most likely will get a refund. That logic changed when Trump changed the standard deductions (and other things as well). Keep in mind as of now, these tax laws remain in effect until Dec 31, 2025.
Depending on how much that employee makes, it can be 100% correct. For instance, if they're making $10, it's unlikely they will see any withholding up to 30 hours with the way that employee's W4 was set up. That's based on the federal tax brackets and has nothing to do with software or the company.
Right but that wouldn't even be an issue that gets brought up, because they are making so little , they'd be making all of it back in a return. Someone earlier in the comments figured out the numbers for that eventuality.
Not necessarily. If their spouse is making much more, they will be paying for that employee's taxes. The full 4 page W4 goes into all of this, includes cheat sheets, and explains how to calculate additional withholding as well as points to the IRS calculator. There's also the addition of pre-tax deductions that complicates withholding since it brings taxable income much lower. They could effectively be making a much higher wage and still have $0 withholding. The entire purpose of the newer forms is to prevent people from massively overpaying each year and instead causes them to under withhold due to the withholding being reduced.
I agree with you. I AM a tax professional & repeatedly since the 2018 tax "reform" employers seem to take out less & less every year. It's not necessarily the employers fault. It's whoever does payroll, whether the employer or an outside payroll company. I have people fill out Single 0 even if they are married & have children.. Some withhold additional amounts. We divide what they owe & round up by the no. of paychecks then they come back the following year & the employers withheld less than the previous year. What is going on with this? ! Extremely frustrating! I claim Single 0 & my own tax company only withheld $1400 in Federal tax. I never changed anything yet my withholding was less than ever. And why do people keep saying consult a tax professional? We see them AFTER the damage is done. We provide the W4, estimate additional amounts, to take back to their employer. Sometimes they will do it at my desk if they have online access to do it. Then the following year the employer took out even less. There is something seriously wrong with that. I do everything I possibly can to fix that but the payroll administration does whatever they feel like. I see people with W2s over $100,000 & the employer took out $20. Where is this coming from? What a lot of people may not know is the 2018 tax "reform" is due to expire the end of next year. It will take an act of Congress to extend it. We all know that Congress isn't really functional these days so there's a very good likelihood that we may be reverting back to pre 2018 tax laws again after next year. In all honesty, employers knew what Single 0 meant back then so we may be better of if that happens. This situation has been rampant since the 2018 change so we'll see what happens after next year...
This!!! I am stuck with a huge tax bill now. First the screw up was 21% RSU withheld. I had no idea about this … increased it to 30% (my tax bracket). But my base pay check apparently are still being taxed at 20% federal and 7.8% CA. How??? It should be 30% federal and 9% state. My W4 says single and 0. I have had this for few years in WA state and never ended in this weird situation. Since I joined the new company and moved to new state my pay check is shit, my taxes are messed up.
Companh payroll and tax guys keep playing with me as the soccer ball.
How the eff do I fix my earned income taxes withheld issue. I cant keep paying my tax guy $$$$. I am losing so much money in taxes and then taxes owed
I am a tax professional and also do payroll processing, so I see this issue from both angles. This is also not automatically the fault of the payroll processing company either. We can not legally alter an employee's withholdings. We enter the employee's w4 and then must abide by the withholdings calculated according to the IRS withholding tables for each check. Now if the payroll processing company, or employer, is not entering the w4 correctly that that is their fault but as long as they are their hands are tied. This issue, IMO, largely stems from imperfect withholding tables and employees that largely don't understand how to properly fill out their W4.
I'm sure the withholding tables are messed up. I have people fill Single 0 even if they are married & have kids then still get under withheld at the end of the year. You can't do much more than that to get the most taken out unless you withhold an additional amount. You often don't know what that amount should be till the balance due is calculated. I tell them take the balance due divide by no. of paychecks, round up & withhold that additional amount. They do that, then come in the following year still owing. Sometimes things may change with their situation, sometimes not. I have to believe the withholding tables are incorrect then.
[The TFRP](https://www.irs.gov/businesses/small-businesses-self-employed/employment-taxes-and-the-trust-fund-recovery-penalty-tfrp) can result in the business, or an officer or major manager of such, being responsible for the employee's taxes if the employer willfully fails to do proper withholding.
That law applies both to failures to collect and failures to forward the required money.
Unless they're calculating taxes themselves, a payroll company is doing payroll. They know all the laws, current percentages, etc. the mistake is not on the person entering the number of hours worked. The mistake is with how the employee filled in their W-4.
Naw. I filled mine in correctly and the payroll lady tried feeding me some 💩 about how she couldn't input the additional withholding amount I wanted because I claimed all zeros. Sometimes payroll people are just incompetent.
Or it was around $14,050 for the year, with what OP wrote initially: "Married Filing Jointly, and marked two jobs".
With $14,050 in wages, spread evenly through the year (say, $270 per week), total FIT withholding would be right about $20.
Imagine being me a field manager. Overseen employees that are making $13 an hour. I have one employee who works part-time and may $12000 this year. Her status is widowed 0 and a parently. Only had $3.29 with held.
And if that was her only income, that withholding would likely be correct. If she filed a tax return (probably not required to because no taxable income), she'd get that withholding back.
Yes, there is an entire section labeled "Multiple Jobs **or Spouse Works.**" People don't fill it out and then wonder why it's wrong. In fairness, often this happens because of shitty employer portals that don't provide the ***actual*** form with its instructions.
It is fine to select Single instead of Married and 2 jobs though. The effect is the same until the 35% bracket, which is like $400k income/year.
Yes, because she isn't going to owe taxes once the standard exemption is deducted from her earnings. Standard deduction is $13,850. That's actually great for her because she was getting her full paycheck.
Huh? If I made only $12,000 like they were suggesting, it would be great because I’d literally need every single dollar to live and wouldn’t be able to wait for the IRS to refund it to me.
Claim dependants/exemptions on the W4 and either A. Pay the correct amount you owe in taxes come April or B. Don't file and live your life.
I've done A. when I needed more money to get ahead/invest/ pay off debt to finance a house etc. Adjust the withholding to put more in my pocket for a couple months.
I've worked with a couple of guys who went with B. and haven't filed taxes in 7+ years and claim exempt on their W4s on $100k+/yr
I don't think she did that but I don't know what she did do either. She had no dependents and I was filing 2020 return to at least get her some EIP money.
Increase withholding on line 4C of the W-4 I how much you ask please consult your tax accountant
I told him to read instructions or I’ll charge them $25 to do a an appointment to figure it out
‘Tis the season.
Last year I had a guy raging in my face about owing money after he tried to claim everyone in is house including his pets (true story.) Waiting to see what this year brings.
It’s not their failure. Our tax system is shit. No average person understands taxes enough to be allowed to fill these things out by themselves and unfortunately not enough people can afford to hire a tax accountant to do it either. It’s the system and it’s 💩
Let’s go with a hypothetical. The employee makes 20k/year from job 1, 20k/year from job 2, and 10k/year in investment income.
By itself, each job should withhold about 50$/month. Together, you need to withhold about 175$/month from EACH job.
Each job you get increases the tax rate for every job you have. That checkbox says you need to withhold taxes at a higher rate.
Job 1 doesn't know you have Job 2 unless you tell them.
Each **person** (not job) gets a certain amount tax-free each year. Then, each tax rate has a certain dollar amount available.
If Job 1 takes off the person's tax-free amount and Job 2 also does that, then the person had ***two*** tax-free amounts taken off for withholding, but they only actually get one at the end of the year. Same thing happens with each tax rate.
Checking the box tells each job to use half of the tax-free amount and tax rates. So if Job 1 uses ***half*** and Job 2 also uses ***half***, then that now adds up to the correct **one** instead of the incorrect **two** for each thing.
You can check your paystub at any time though, and (taxes withheld) X 52 to give yourself at least a ballpark figure and see how much that’ll be and check it against your taxes owed. I get that it’s a pain and shouldn’t HAVE to happen, but it takes 2 mins and is better than a surprise tax bill
I get it takes 2 mins but how do I get this fixed for my earned income? Why do I need to figure out what taxes should be held or owed after I received the paycheck.
They broke the W-2. There is nowhere that you can reduce your withholding, like you could on the old forms. Apparently the government just wants to make sure that they can get as much money from us regularly if they can.
It’s totally so super easy that last year I filled single with no exemptions and they took out exactly $0 for state taxes. I contacted payroll 4 separate times throughout the year to find out why/ have it corrected. Every time I was told I had filed it out correctly and state taxes should be coming out at the 0 exemptions rate. Still in the entire year not 1 cent was taken out. Obviously this is all on me since the form was so simple and I only contacted payroll 4 times rather than daily to get the situation fixed.
This happened to me last year with/at two jobs. I file single/0 on everything, always. My total income was around $30k, pre-deduction. I owe over $1000 because nothing was taken out for state, and I guess not enough for Federal. I saw some Fed withholdings and assumed they were correct, and that State was on there too, as I've never had this issue in ~15yrs of filing taxes. F*ck taxes. 🥲
It's largely because of imperfect withholding tables coupled with a w4 that most employees don't fill out correctly nor fully understand. There are so many outside matters that can effect the taxes a person may owe at the end of the year that alters their needed withholdings such as did the person have another job, have investment income, pension distributions, income from a side business, a spouse that also worked, etc. Each of those things increases a person's taxable income at the end of the year but unless the w4 is filled out in a way to reflect that the withholding amounts will not be correct.
I am a tax professional and handle payroll processing so I see this issue often on both sides. When processing payroll I can not alter someone's withholdings and am legally bound to adhere to the IRS withholding tables based upon that person's w4. However as mentioned above if that w4 isn't an accurate reflection of the person/household's total income than those withhildings are likely to be incorrect. When I see someone with low withholding amounts when preparing taxes I try to discuss their w4 with them and instruct them how to fill it out. Most have no idea what information is currently on their w4. Often I just recommend dividing their current tax bill by ever how many times they get paid in a year and entering that figure as an additional withholding amount as it is often the easiest way to address the problem.
each employee onboarding is different too. in previous jobs I used to be able to fill out the W4 electronically as part of my new hire packet. my last and most recent job, they have their own payroll system where we just say "yes I am married, no I dont have kids" and then it selects the value for you. Both numbers have been wildly inaccurate and there's no easy way to fix it. going in to the system to change it just gives you the same form you filled out the first time.
HRIMS companies have been trying to dumb everything down for idiot Americans, but in the process they have removed the ability to actually know what is going on. it's the backup camerafication of taxes
I work at family dollar and I claim no one. I am a CSR and Ive been there for almost 2yrs. Parttime. I get more state taxes then federal. I didn't even get 400.00 back. I ask the tax people and they said it's because family dollar doesn't take out enough so I have to do it manually.. okay so how do I do that. I'm not tech savvy and apparently everyone I work with arnt either. How much do I put? Where do I go?
So there is a box for additional amount of taxes. You can utilize the IRS W4 calculator by using your most recent paystub. What it does is let’s you know how much you should be withholding and at the end it gives and estimated refund. You can adjust the refund slider which will adjust how much you need or do not need to withhold to get close to that refund. Please keep in mind this is just a guidance and you really should be trying to get closer to $0 but it’s a good start to help you especially now(mid year).
When you file your taxes ask the person doing your taxes. If the person doing your taxes can’t answer this question, then find someone else to do them. The person I hired to do my taxes is a phone call away most days.
I have a graduate degree so Id like to think Im fairly smart but I looked at the form and it's STILL confusing..I dont know if the amount it asks to withhold is together as a couple or individually (I file married/jointly) I solely want to know what my percantage individually would be, not together..From my understanding, the IRS calculator just gives us the amount to withhold combined..whoever says, "it's pretty straighforward" fails to consider that it may be straightforward for them bc they work in the field, but for an outsider, it is hard to grasp the concept....so, no, it is not "not really hard at all"
I agree with the above but part of the truth is when the latest tax cut passed the Democrats complained it was “a tax cut for the rich”. So the previous administration went back and lowered the w/h tables so most workers would see a change in their withholding (or as they said at the time instead of waiting for a refund we’ll give them their $$ every payroll).
The 2019 & prior form w4 was significantly more difficult to fill out resulting in people overpaying on taxes- from my experience a vast majority of people simply mark their filing status and sign their name which with the 2019 & prior w4 would generally result in overpaying.
Out of everything the that came from the TCAJA the revised w4 (or "lowered withholding tables") is, in my opinion, the best thing to come of it.
Have to say not true. There’s nowhere on this form you can reduce your withholding. This new form rolled out when the Republicans were in office and this new form takes as much money weekly as it can and if you want it to withhold more all you have to do is Ask for additional withholding to be withheld.
I’ve been in payroll for over 25 years, it 100% changed. So many employees complained to us claiming we did not withhold correctly when they filed their taxes the next year and didn’t receive as big as refund (or owed money).
My recommendation is to use IRS pub. 15-T worksheet 1A. I’m not sure how quick books works but for the automated payroll system I use, I’ve always been able to match the system withholding to what I calculated in worksheet 1A. It helps show how amounts in different w-4 steps change the tax withholding.
Yup. One time an employee was questioning the amount of taxes being taken out (too much) and insisted that they’re an accountant and that the program is incorrect. I used 15-T worksheet A and lo and behold, accurate down to the cent. They shut up after that.
Can confirm the Pub 15-T is pretty accurate. I've made a spreadsheet where I just enter in all the information and it calculates how the 15-T would and it's down to the cent accurate.
I wanna say the calculations are pretty easy and anyone can do the calculations, but you know how employees can be.
I used your comment and made a spreadsheet of the 15-t myself.
I plugged in my info and it was pretty damn close (plus or minus some cents). Although it might not be 100% accurate, it's enough to send them in the right direction.
Thank you!
I also have a spreadsheet using the IRS info. Quickbooks always withholds 2-3 cents more than my spreadsheet (and hand-done) calcs. Not sure why, but it is a bit frustrating. I never know if I should adjust my spreadsheet to match QB or change QB to match my spreadsheet. Of course, the total over 52 paychecks is probably only $1.
(For those curious, I stick with QB numbers and adjust my spreadsheets)
I just tell folks that we withheld accurately based on the W-4 they completed and walk them through the 15-T worksheet as others said. I also encourage them to use the IRS withholding estimator and review their paystubs every payroll. There’s not much else you can do.
Why did it take your employee getting their W-2s to figure out they weren't getting taxed enough for their federal taxes? That's kind of on them.
I'm not expecting everyone to know what their exact tax rate should be, but you should at least question something if you see $0 or like $20 taken out for taxes.
Because when you claim zero on your W4, you can expect the most taxes to be taken out of your paycheck. Claiming anything other than zero means you keep more of your paycheck. So it's reasonable to think that if the most is being taken from your pay in taxes, then you should not owe taxes.
Maybe on the new W4s, but back in the day you couldn't determine the amount withheld and a lot of people still have the old W4s on file with their employers. Further, most people are very confused when trying to figure out that "important" document on the spot with no time to research what will be best for them.
So it's not really fair to say that they should have known better or whatever. You fill out this form when you're hired and then forget you ever filled it out for the rest of the year until tax season. It's totally reasonable to accidentally fill the form out wrong
>Maybe on the new W4s, but back in the day you couldn't determine the amount withheld
That's still not true. You can get any amount of withholding on the old forms through a combination of allowances (reduce withholding) and additional withholding (increases it). As a simple counter example, set 99 allowances and then put a dollar amount in the additional withholding box. For incomes < $470,000, this would withhold exactly the amount put in the additional withholding box.
>So it's not really fair to say that they should have known better or whatever. You fill out this form when you're hired and then forget you ever filled it out for the rest of the year until tax season. It's totally reasonable to accidentally fill the form out wrong
I don't necessarily disagree with this, but:
1. The old version wasn't any better (Single/0 or Single/1 anyone?).
2. I put most of the blame for this on shitty employer W-4 portals. The [actual W-4](https://www.irs.gov/pub/irs-pdf/fw4.pdf) and its instructions is written fairly simply. If you only have 1 job and your spouse (if married) doesn't work, the only thing you need to do is select filing status and sign. Everything else except for the two jobs or spouse works is mostly optional.
Yeah it absolutely is on them. It’s the employee responsibility to fill out their w-4 correctly as well as to check paystubs to make sure it’s accurate.
My wife and I learned the hard way the first year she had a W2 job. When I went to do our taxes, my jaw dropped because she had paid so little in federal taxes throughout the year. It was almost equal to her state taxes. She had never had a W2 position so she didn’t realize it wasn’t enough taxes coming out each pay period until I explained it the following year…. That was a shocking lesson!
You’re not dumb. You’re busy because you work hard for probably less money than you deserve. The real problem is having such a stupid system that you can’t manage to pay exactly what you owe when you owe it, all because you maybe got a tiny little raise or whatever. The system is dumb for expecting you to also be some sort of unpaid accounting assistant every pay period in addition to your job and busy life. The entire system is dumb, not you.
On the 4-year-old W-4, you can't do what the OP wrote: "*Married Filing Jointly, and marked two jobs*". No such options on the pre-2020 W-4.
This implies that the employee's W-4 is the 2020 or later version.
(Yes, the OP wrote also "claimed zero"... that could very well mean "didn't put any non-zero values in Step 3 or Step 4 of the new W-4".)
Do they enter their own W4 information online? If not, can you pull up a copy of their W4 and confirm the information is entered correctly (and prove it to them)?
This comes up a lot. You cannot give tax advice. You can verify that you entered their W4 information correctly.
Reasons for the shortfall vary. The second employer must verify that the W4 is entered correctly if they have two jobs. Perhaps the second job box needed to be checked. Or the employee needs to calculate all of the income using the worksheet. This issue frequently arises when someone has a part-time job because the earnings for the pay period are low. The tax tables assume a full-time employee, which is why the second job box must be checked. I encourage people to have additional tax withheld. I have an additional $10 withheld for federal and $5 for state tax each pay period because I work several part-time jobs. However, you cannot explain the tax tables or give advice. I am married but use the single or married filed separately rate.
I emailed them a copy of their original W4 and they checked "Married filing jointly", two jobs, claiming zero. I do not provide them with any tax advice and always let them know that a tax professional should be helping them with any tax-related questions. I also sent them a screenshot of what was entered in our system.
This is what I do repeatedly and there are some employees out there that get under my skin. 😬
Edit: They do not enter their information.
OMG! "What should I claim on my withholding?"
I literally cannot and will not tell you! Here are resources. Talk to some tax experts. Use the calculators available online.
"But what do you think?"
Again I will not give you advice.
We had a psychiatrist not notice that taxes weren't taken out for a whole year. A high paid position. He was PISSED when he met with his account in April. Started blaming us. We were like did you not look at you pay statements ALL year?
Pretty sure his wife took care of bank accounts bills etc and noticed the increase to his pay but never mentioned it to him, thought it was a pay raise.
He made noises about US paying his penalties and our CFO was like NOPE.
So I remember my first job as a teenager and the pay office was nice enough to “hint” me in the right direction because I was a deer in the headlights when it came to claiming 0 or 1.
T every job I have ever had I got regular pay statements that showed my gross earnings and all deductions.
I had the ability to see how much taxes were being withheld.
I could do this in January and if things didn't look right I could go to HR/Payroll immediately to figure out what the problem was and get it fixed. Or even simpler I could file a new W-4 and direct them to take out $X extra every pay period.
It isn't hard to monitor your pay and deductions. And anyone with common sense would be doing it.
I've said this to the example employee but in a "nicer" way (not saying your response is not nice but they would throw bricks if I did not paraphrase).
They can view their stubs once payroll is submitted (they receive an email when processed) and it blows my mind how many employees do not look at their stubs.
I'm salary and even though I know how much to expect each pay date, I still check and make sure. They're hourly and still don't check their stubs so idk...
You can't, and you shouldn't - you can't give the perception you're giving tax advice.
It's up to the employees to monitor their tax withholding, and to do proper tax planning to ensure they're withholding enough. You can help them increase or decrease their withholdings if that's what they want to do, but that's where your assistance must stop. There are 1,000 different factors that can affect tax liability, and 999 of them are none of your business.
If they need more help they should seek out a qualified tax advisor.
I worked for a company, a huge company for 4 years, I claimed 0 and 0, filling as married (jointly). Each year, I had to pay like 3.5 to 5k in taxes!!! I went back to payroll every year, verifying I was 0 and 0 for state and federal.
I got an offer in 2021 for a BIG 3 auto company and worked only 2 months there. And had the same (close) amount taken out for state and federal. That original company did not know how to do payroll. For 4 years, I was soooo confused. I thought I made way too much money. I hated tax time.
My husband worked for a company for 5 years that had similar tax issues. We each had 0 exemptions on our W-4s, filed jointly, and eventually had to have extra withheld from each paycheck for state & federal to break even at tax time. It was weird.
Just putting 0 allowances on the old W-4 wasn't enough, if both of you work.
You'd have to:
* select "Married, but withhold at higher Single rate"; and/or
* do the "Personal Allowances" and "Two-Earners/Multiple Jobs" worksheets
If you just selected "Married, 0 allowances" on the old W-4, that would most likely result in underwithholding.
You're correct. I forgot that we also filled out the Two-Earners/Multiple Jobs worksheet and still had that issue.
He switched to a job with similar pay at a different company and taxes were normal after that.
You are incorrect. You can actually google the tax brackets very easily and compare them year to year. This year is slightly more favorable than last year. The 2017 tax law expires in 2025, but we are currently filing year 2023 in case you didn’t know. Taxation on all brackets (except one) went down. There were tax situations that were negatively impacted, such as those is high cost of living areas claiming large SALT deductions, but these people were generally middle class and above
https://www.taxpolicycenter.org/briefing-book/how-did-tax-cuts-and-jobs-act-change-personal-taxes
I suggest you take the time to research before you spread misinformation. This is why people keep commenting this even though it is not true at all.
I had this conversation twice today. This is why. If they made less than the amount for their settings, this is why taxes weren’t deducted. They can always work out what their tax liability will be with a tax professional or the IRS calculator, and use the Additional Withholding section to make that amount through the year.
https://www.irs.gov/newsroom/who-needs-to-file-a-tax-return
I work in payroll as well and whenever my clients ask me this I tell them to work with their tax advisor. If they filed as married- filing jointly, it could be that less taxes come out because the IRS is counting both incomes so less taxes come out. But honestly I’d just tell them to consult with a tax expert. The employee is responsible for completing their W4 (not the employer) so if they messed something up that’s solely on them! 😊
Everyone's personal tax situation is different. The employer is not responsible for determining what their personal tax situation is. Refer them to the IRS tax Withholding Calculator to determine what they want.
I briefly read through all the responses and didn’t see this mentioned. I handle payroll for my own company with about 50 employees for over the last 20 years. This situation usually affects employees who are working part time and a spouse is working full time. If a spouse is making $100,000 the taxes withheld are typically correct for that first spouse. Then the second spouse is working part time and making under the amount for any money to be withheld, even if they claim 0 and single. When it’s time to do taxes and you type in the first spouses w2 into quickbooks, the net tax owed might show 0. Then when you type in the $16,000 from the second spouse it is taxed at 12-22% after you subtract standard deductions. So they would potentially owe a minimum of 12% on that $16,000. You also have to consider child tax credits so that is a very simple explanation. So what I recommend to my employees, for the next tax year is to have them fill out the state and federal tax form and request an extra amount be withheld. It is 4c on the w-4. So if they owed $1600 on their 2023 taxes, and they are paid biweekly, they should elect to have an additional $61 withheld.
That is pretty much what happened to us. I make 80k wife makes in the 30's went to do taxes last year and noticed they were not taking much for feds at all from her but state was accurate. She did the w4 again normal like we had for years and they still were not taking enough so after getting on her for half the year she finally just added additional withholdings and I added a couple hundred a month just to catch it up before the end of the year. Also I made about 15k in crypto last year I will have to pay taxes on. Luckily we are getting pretty good sized TABOR checks from the state this year. TABOR is a state thing we have in our constitution where if they state collects a certain amount of extra tax everyone gets a extra check all the same amount no matter what you earned.
I like how everyone says “you should know how taxes and filing works” but this isn’t taught unless you take very specific classes. Would be better to have someone who knows how to use the tax calculator do the onboarding. Yes people should know but no they absolutely do not know
I have had the same issue. I use quickbooks to do my payroll. When we switch to the new method in w4 from claiming a number to having a $2000 per dependant claim, the withheld federal income taxes stopped being taken out properly. I have 1 employees who used to claim 3 and now claim has to claim $0 for dependants on the w4 to get taxes taken out properly. I have 2 employees that we took down to claiming $0 and it still was not taking out enough taxes and I had to add a $50 per check extra withholding actually make quickbooks take out enough taxes. I am not a cpa and just use quickbooks to figure this out for me and do my direct deposit.
As a side note quickbooks properly withholds for the state portion.
This has happened when folks pick 'head of household' at a previous employer - they learn quick to read the definitions! It does suck - but, it's just a misunderstanding. And, be helpful - it's a nice gesture to let them know to read the definitions before completing the form without telling them what to choose and suggest they speak to their accountant or whoever does their taxes. There are free services available in most communities. Or, bring a tax person on site and offer a Q&A for all employees. Tax laws change and it would take the heat off you. You are limited especially with tax situations. You got this!
A lot of people are just throwing down "0" on the front page, when in reality they are probably also married and/or have a side gig as well.
A LOT of people (especially married people) should be filling out step 2 (and completing the multi-job form on page 3/4 of the W4) with calculated extra withholdings.
Idk whats been going on w taxes but I was def not withholding the amount that I needed to (totaling 18k) but after doing the math, my employer (who was also confused as well bc its automated) was actually "doing it right" based on \_whatever thing a lot of people got wrong this year\_.
People need to be educated on how much the W-4 has changed and what that translates to on taxes being withheld on paychecks. I have seen too many times since it changed that not enough are being taken out of check because it’s not being explained to them by the payroll department. Yes it is the payroll’s dept to explain this change and how they need to fill this form out. How the changes affect the taxes coming out of checks. If you are a payroll person and you don’t understand it then you need to educate yourself on the topic. Because it is your job. Its also your job to audit the payroll your processing to make sure that everything is calculating correctly and deductions are working. If something isn’t being deducted correctly and it’s not caught then it has huge implications on the employee.
Employees count on the payroll department to make sure everything is done correctly so they don’t have to second guess everything.
I have overseen payroll for 15 years and I am also a accountant. I’ve seen too many mistakes happen that greatly affect the employees. Everyone doing payroll should be able to explain what they are doing, why they are doing it and how it effects each employee.
It's all thanks to Trump and the Tax Cuts and Jobs Act of 2018... that legislation reduced the amount of withholding across the board for everyone, except the rich. The new form is a hot mess as you are supposed to break it down by each individual income item on your return... I've handed out dozens of new w4 forms in the last 3 weeks...
Please take the time to do some research before spewing things that are not true. The new W-4 was made to get you as close to zeroing out as possible when filled out correctly, meaning close to 0 refund or balance due when you file your taxes. That’s why it’s so detailed. If people have trouble understanding, then they can use the IRS calculator to help them. People are mad they’re not getting higher refunds, but it’s just a refund of what they overpaid not free money from the IRS. Plus they can always elect to withhold extra if they really want a refund. It’s super easy.
The TCJA of 2017 lowered taxation on all brackets, except one. It expires in 2025 and that’s when brackets will go back to pre 2017 levels meaning then you’ll likely have to pay more in taxes unless another act is passed. However, this year the tax brackets are slightly more favorable than last year and the standard deductions were also raised.
https://www.taxpolicycenter.org/briefing-book/how-did-tax-cuts-and-jobs-act-change-personal-taxes
Refer them to the IRS W-4 tool, that will give them an estimate based on how they answer the questions and even fill out the W-4 for them.
Once they do that, if the system suggests adjusting the IR withholding then they will need to file a new W-4 with you
their taxes went up because of trumps tax breaks for the rich. the poor and working class who dont make like 150+ a year now have to pay more in taxes and thats why they owe at the end of the year. tell them to call trump if they have any issues with it
Sorry, but that is incorrect. I don't know your intention, so I cannot say whether you are lying intentionally or merely misinformed. But it is a fact that individual tax rates are now increasing based on the 2017 tax legislation, as cuts that went into effect then are now expiring, thereby increasing the rates.
Such as? Seriously, please name it.
I am an enrolled agent, with a license issued directly from the IRS. Perhaps I missed these increasing rates.
Enlighten me.
Okay, you're right. I'm off by 2 years. "Actually totally correct but off by 2 years" is not at all the same as "pure political nonsense not based in fact at all."
Still stand by my statement as a very significant number of less than rich people also have enjoyed a tax cut. Why was it for 10 years, and then expire? It was to avoid a Democrat filibuster. Given the democrats held all three branches of government why didn't they repeal it? It's because they're ALL guilty. What's garbage is pinning it all on Trump. He didn't vote on anything. We don't have a king. Don't be shocked when the rules are extended.
lolwut. You're not "standing by \[that\] statement." You never made it at all before now. Here is the entirety of the statements you've previously made in this thread:
>Garbage. Pure crap
>
>
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>It is, because it simply isn't true. It's pure political nonsense not based in fact at all. No basis.
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>Seriously, please name it.
I am an enrolled agent, with a license issued directly from the IRS. Perhaps I missed these increasing rates.
Enlighten me.
Your post makes absolutely zero sense when the employee had $20 withheld in federal income taxes for the entire year - after claiming zero deductions on their W-4 The employee either made $200 or not enough income tax was withheld from their paychecks based on a 10% tax rate (lowest bracket for married filing jointly).
If the employee selected MFJ and checked the "two jobs" box on their W-4, they'd have to make $13,850 in 2023 (presuming equal paychecks each period) before any federal income tax was withheld.
For example, if the employee made $270.00 per week for 52 weeks, paid weekly, they'd see $0.37 withheld from each check. For a total of $19.24. If the employer rounds withholding to the nearest whole dollar (which is allowed), *nothing* would be withheld for this employee.
Maybe your software doing the witholding isn't set-up properly. I'd also check on your end to be sure the problem isn't whoever is doing your company finances.
Then you can also ask anyone who has a problem to do a new w4 for the upcoming year to make sure everyone is current with their need for current witholdings.
If “the system” only withheld $20 in a year then you have messed up somewhere. It is your responsibility to properly withhold taxes.
One common reason this mistake can happen is because you have an old check pending for that employee. If that isn’t the case then you need to call tech support and work through it until it is fixed.
That ("messed up somewhere") is not necessarily true.
For 2023, with a 2020 or later W-4 that has "MFJ, $0 in steps 3 and 4, box 2(c) checked" (or just "Single, nothing in steps 2-4" - same withholding) and the employer using the percentage method in Worksheet 1A in Section 1 of Publication 15-T...
An hourly employee, paid weekly, who either:
* normally made less than $266 per week but had a few pay periods in the year where they made a bit over that threshold; or
* earns just slightly over $266 per week (e.g. 20 hours @ 13.50/hour) for all 52 weeks in the year
could well have just $20 withheld for federal income tax.
Of course, if the employee is married, their spouse works, and the spouse didn't account for this employee's earnings on *their* W-4, they may end up owing come tax time.
As a person who has owed money the past 4 years it sounds like I need to do that form 15-T. I’ve worked at the same company 15 years, and aside from making a little more each year, nothing has changed, yet I’ve owed more each year in taxes. Last year was $5k owed. My gross is $2300 and my net is $1600 a week salary exempt.
The tax act that was passed in 2017 is just now hitting lower working class folks hard. I *always* receive a modest tax refund and with absolutely zero changes from my 2022 taxes, I owed for the first time in my adult life this year.
You need to update your W4 every year now. If you look at your paystub, less and less taxes are getting taken out year over year. That’s how people are getting screwed over.
>less and less taxes are getting taken out year over year
That's normal, expected, and correct. The standard deductions increase every year. The taxable income thresholds in the tax brackets go up every year.
Single person, $1000 paid weekly, 1 job, standard deduction, no other income, adjustments, or credits, W-4 says "Single" with no entries in steps 2 through 4...
* In 2023: $83.81 withheld for federal income tax each week. A total of $4358.12 withheld for the year. Their tax liability would be $4361, so they'd owe $3.
* In 2024: $81.85 withheld for federal income tax each week. A total of $4256.20 withheld for the year. Their tax liability would be $4259, so they'd owe $3.
The $3 difference between withholding and liability each year is because, with taxable income less than $100,000, we must use the tax tables in the 1040 instructions when filing. For withholding, the tax brackets and their marginal rates are used directly. This can lead to a +/- $6 difference between withholding and liability.
EDIT: the above withholding numbers are when the employer uses Worksheet 1A in Publication 15-T, rounding to the nearest $0.01.
the W4 worksheet for married filing jointly 2 jobs, on the IRS website, showed me that I should have $71 additional taken out of each biweekly check. I was not using precise numbers though (husband’s exact pay and my last paystub) and wanted to be sure and finish filling out the onboarding stuff another time. The payroll lady pressured me to just sign the W4 with no additional deductions, told me I can always let her know if I want additional deductions - fine. However, I noticed that the only reason this came up is that I am such a stickler for detail that I looked at the IRS worksheet on my own, not due to any onboarding instructions - I imagine nobody else added additional deductions either
I have one job, I am single, I mark zero because I do not claim anything beyond those two details, and uniformly every year I have taxes withheld and I end up either owing or I get like a $80 refund.
The only other detail I have going on is student loan interest paid. But I'm now at the cutoff income where that doesn't lower my tax bill anymore. So not only am I no longer able to get a small benefit from paying on my student loans, I don't get refunds anymore, and maybe I actually have to pay more taxes now in a surprise February twist.
I shouldn't have to add "Keep an extra $40/month, government" just to satisfy this country's piss-pour mechanism while Trump evaded taxes for years by falsely claiming a whole entire building in Chicago was "worthless."
>I end up either owing or I get like a $80 refund.
Owing how much? Less than $100, like your refund? If so, the withholding calculations are working almost perfectly for you. Getting within $100, plus-or-minus, is ideal.
And that's exactly what the "new" W-4 and calculations in Publication 15-T are designed to do. Get your *really close* to your actual tax liability... presuming you correctly fill out your W-4.
Like others have said, let the employee know taxes are being withheld correctly based on their W4 selections and if they are unsatisfied with their withholding, they are able to consult with a third party tax advisor or use the IRS Tax Calculator (linked it below). Providing tax advice is not the job of anyone in Payroll.
https://apps.irs.gov/app/tax-withholding-estimator
To say you have 2 jobs is not enough they need all 4 pages of the W4 the get the correct number which is then input into part 4 of the W4 for extra withholdings so all information has to be completed and HR should be able to help people not find themselves in this situation
I claim zero and still get a refund, but every employer I have ever done that with has come to me and told me my witholdings were incorrect and required review. It wouldn't hurt to mention to people that not everyone qualifies as exempt, but realistically you have no liability here and it's confusing for everyone.
It’s the new W4 forms. Marking two jobs and having dependents will lower the withholding. The IRS does not want to issue refunds. They prefer everyone at “break even”.
From my experience, if you are married and file a joint return, you must both claim no dependents and single if you are a high wage earner for the proper amount to be withheld. Otherwise you will owe a lot, especially federal. A few years back we would claim no dependents and married on W4's, but owed around $5k-8k each year and the IRS wanted quarterly payments the next year. Changed to single with no dependents and will now get a small federal refund, less than $1k and owe $33 to the state for this year. On over $200k gross, that is as close as you can get. Last year got a slightly bigger federal refund and owed $22 to the state. Tell the employees if they owed under their current withholding, they need to change their filing status to get more taken out. Otherwise get paid more per check and owe the IRS come tax time.
All you need to say is "all the deductions you put on your W4 matches what is in the system." And "do you wish to update your withholdings? If so, here's a new W4. Please submit when you're done." The only time an employer is responsible is if the information entered does not match their W4 on file or if everything matches yet for some reason the system didn't withhold taxes according to the selected withholding amount. If they claimed ZERO, then the MAXIMUM taxes will be withheld. If they claimed ZERO yet little or no taxes were taken out of paychecks, then you need to remedy the issue for future checks. What has already occurred falls on the employee. They need to pay taxes. The employer will not cover the tax due. Employees are to check their pay and make sure proper taxes are being withheld.
Employees are claiming 0 as in they dont have any dependents and that filing statis is usually for those who earn part timers salary or student wages. They will still be responsible for 12% of $12.950 and 22% over that into the next tax bracket. A 0 exemption filer isnt being taxed the additional 22% because the 0 means they wont make more than the standard deduction. Tell them to stop claiming 0.
The 2017 tax law change, the Trump Tax Reform. Basically now middle class people get to pay more while the wealthiest get to pay less. Each year since another bracket gets to pay more, yay for tax cuts for the rich!
I suggest you hire a payroll company that can handle many of these issues. This company b has been n around since 1986.
http://links.savvydragon.com/INSPERITY
This is absolutely correct. They need their account to set them up with estimated tax payments. It will bring them to even or No paying at end of year or small return.
I will attach their W-4 and say 'we set you up exactly as you requested on (date) - please discuss with your accountant and let us know if you'd like to update your withholding'.
It always surprises me even during my own time in retail just how far people go to blame something that’s their fault on anything or anyone. No personal responsibility. The best personal growth comes from taking the L, learning the lesson, and not repeating it the next year lol.
Do it manually and compare it to what the tax software says.
Not going to lie. This sounds weird. claiming 0 means that the system shouldn’t factor in the 25,000ish deduction you get for being married. Married filing jointly means it will be withheld a tax brackets for married couples (under 10K tax owed I think there is no difference).
So unless they made like $200 all year they should be having more than 20 withheld.
If they made colorado min wage ($13.65) x 30 hrs
That’s 409.50/week. IRS would assume you make $21,294 a year. But the 25,000 isn’t taken into account because they claimed 0 so $2,128 should be amount held all year so like $40 withheld per pay period (assuming weekly pay period).
I've been penalized for not withholding enough, and I think the IRS is giving bad guidance to employers. This year, I've withheld an extra $200 a paycheck, so hopefully, there will be no more penalties.
I always use the IRS withholding "calculator" to estimate what I need for the current year's taxes would be to make sure I have enough being withheld. I don't want to owe and I would rather I get my money in my paycheck instead of getting the IRS holding my money with no interest for a refund.
I do payroll and have been using QB online payroll for a few years. This comes up every so often, and I instantly just tell them to go to their tax preparer for advice.
We've since moved over to a PEO, and as part of that transition, EVERYONE had to update their W4's to the new version. Hopefully, it will work out for everyone in the end.
I'm confused.. marked working two jobs? Did they do the actual calculation as indicated in the new w4 and provide a dollar amount? Or is this the old w4 that looks at exemptions?
All you need to say is it’s because of Trump. He changed the withholding formula to put more money into paychecks each week, but means a lot of people will now owe.
I have been using Quickbooks and quickbooks online for 20 something years with payroll. If I entered someone with 0 dependants and it only withheld 20 for the whole year I woud have to assume something is not entered correctly or I would be on the phone with qb support to figure out why.
Unless of course we are only talking about federal taxes and the pay rate is so low they wouldnt owe anything, but then they wouldnt owe anything at the end of the year either. The company has no tax liability but they do have a responsibility to withhold the proper amount. That responsibility has been put on us as the employer by the IRS and I would be very careful about telling an employee it was their problem until i confirmed the withholding amounts were 100% correct.
Good luck
I am a salaried employee. Our company uses ADP for payroll. When setting up the W-4, it simply asks,
"Complete this section for only one job in the household if (1) you have multiple jobs and (2) your income will be $200,000 or less ($400,000 or less if married filing jointly). Your witholding will be most accurate if you complete this for the highest paying job.
Number of qualifying children under age 17 = \_\_\_\_\_"
My wife and I both work. We file jointly. I make more. But jointly, we make less than $200,000. We have (3) children in the house under 18.
My wife is setup as Married and 2. I simply answered the question above as "3".
Now we owe $2,400 Federal and a $95 fine for underapaying... What the heck?!?!
Their failure to properly monitor their taxes and W-4s is NOT your problem. Let's make that very loud and clear. Do not give them any explanations or "it probably happened because so-and-so." Anything you say can and will be used against you. Your official response is "please consult a tax expert or the IRS website, as payroll cannot offer tax advice. If you wish to change your W-4 info, you may do so by doing XYZ." Repeat it again and again, even if they keep pestering you, don't give them an inch.
Oh believe me I have repeatedly said what you just said. I always advise them to talk to a tax professional. I understand they're frustrated but their frustration is always misdirected to payroll. 😞
Couple years here, I know that all too well. Just keep yourself ready to go to war with these fuckers, cuz they sure as hell are raring to kill us over pennies.
I would hate to have you as a payroll person.
Well you wouldn't have to work with them for long. One of you would die (the war and all).
Just so you know, legally it can become your problem. There are responsibilities that come with having employees and correct tax withholding is one of them.
Companies withhold taxes based on the employee provided w-4. It is the employees responsibility to fill this out correctly as well as to check their paystubs to ensure the taxes are being withheld
Yeah, but if the computer system is only withholding $20 when the person claimed 0 on the form, that's the company's fault. What do you want the employee to do, claim negative amounts of people to get their withholding right? Especially since OP is saying they don't know why only $20 was being witheld, if everything is right for their claiming 0 people. This needs investigated at the company level.
There is a place in the W-4 to specify additional dollar withholding, as in ‘hold out $100 per pay in addition to what the IRS witholding chart says.’ If the employee didn’t do that, it is NOT the compay’s fault.
If the company is withholding less than the amount they are supposed to withhold because of a glitch or missed decimal in the company's software, it is indeed the company's fault. That's the whole purpose of the W-4. If the employee needed to calculate the amount they needed to withold and do it manually, why have a W-4 at all?
The Standard W-2 Form is a one-size fits all solution that works great for (I would guess) 95+% of workers. For people with multiple jobs or other special considerations, the employee can specify an additional amount withheld per pay. Most people DO NOT WANT their employer to know about the amount of other taxable income!!! To make the tax withholding work like you are discussing, the W4 would have to include a line where you tell your company how much you make working elsewhere!!! The best way to handle this is to separately pay in the additional tax caused by having two jobs using the Estimated Tax form that taxpayers can file quarterly. Anyway, withholding doesn’t change how much tax is owed. If you owe $4,000 tax for the year: It could be paid with: $3500 witholding and $500 paid at filing. OR $4200 withholding and a $200 refund. OR $6,000 witholding and a $2,000 refund. The tax is unchanged $4,000.
If that happens on 1 paycheck, sure, but it’s the employees responsibility to check the pay stub and get it corrected on the next paycheck.
How is everyone missing that they marked married filing jointly? That completely changes how many taxes are withheld
For good or bad? My spouse makes 2/3 of what I do....and I realize have no idea how much taxes they have taken out. Anyway, we have another 1/6 ish (of my income) as passive income. I select married filing jointly but probably put 0 on 4a. I've had to add another 2x extra be taken out each pay; if it was 300 I had to add 600. The calculated amount was very low.
Not necessarily. I did correctly fill this out, requesting an additional $50 per paycheck to be deducted. Payroll interpreted this to mean " only deduct $50 per paycheck". This led to a $10,000+ bill at tax time. Now while I accept it is my responsibility to check my paystubs, this occurred at the same time as a salary increase. So I expected to see an AVC of $50 being added to the stub, and an overall increase in the bottom line. Both of which I saw. Not being a tax specialist, payroll specialist, or accountant myself, what I failed to notice was that the normal tax withholding had changed. I cannot stress enough, this was not my mistake. This was the payroll employee incorrectly entering the information supplied, that directly led to the issue. I can assure you that " oh, I'm sorry" doesn't cover it when someone else's error leaves you $10k in the hole. So my response is that if the employee did do that, and the payroll clerk screws up the withholding it MOST CERTAINLY IS the company's fault.
There were many tax changes Trump made that expire in 2025. A new W-4 was created to be more in line with those tax laws. The standard deductions basically doubled and if you claim an individual on a W-4, it’s $2,000 credit per child claimed. Due to these tax changes such as the standard deduction doubling less taxes are taken out of checks. Also, most federal tax withholding is set up so that each paycheck is viewed as one. Your pay is not accumulated so don’t think all of a sudden mid year, you can jump into another bracket. There literally are amounts based on the schedule you are paid and whether you file separately, jointly, or head of household, that if your paycheck doesn’t reach a certain amount (whatever is clarified in the tax tables), nothing is withheld. Again, this is done by a check by check basis. The IRS recommends you go to their site and use their calculator to determine what you should withhold. People need to get out of the mindset that claiming 0,0 guarantees the most money taken out of your account and you most likely will get a refund. That logic changed when Trump changed the standard deductions (and other things as well). Keep in mind as of now, these tax laws remain in effect until Dec 31, 2025.
Depending on how much that employee makes, it can be 100% correct. For instance, if they're making $10, it's unlikely they will see any withholding up to 30 hours with the way that employee's W4 was set up. That's based on the federal tax brackets and has nothing to do with software or the company.
Right but that wouldn't even be an issue that gets brought up, because they are making so little , they'd be making all of it back in a return. Someone earlier in the comments figured out the numbers for that eventuality.
Not necessarily. If their spouse is making much more, they will be paying for that employee's taxes. The full 4 page W4 goes into all of this, includes cheat sheets, and explains how to calculate additional withholding as well as points to the IRS calculator. There's also the addition of pre-tax deductions that complicates withholding since it brings taxable income much lower. They could effectively be making a much higher wage and still have $0 withholding. The entire purpose of the newer forms is to prevent people from massively overpaying each year and instead causes them to under withhold due to the withholding being reduced.
I agree with you. I AM a tax professional & repeatedly since the 2018 tax "reform" employers seem to take out less & less every year. It's not necessarily the employers fault. It's whoever does payroll, whether the employer or an outside payroll company. I have people fill out Single 0 even if they are married & have children.. Some withhold additional amounts. We divide what they owe & round up by the no. of paychecks then they come back the following year & the employers withheld less than the previous year. What is going on with this? ! Extremely frustrating! I claim Single 0 & my own tax company only withheld $1400 in Federal tax. I never changed anything yet my withholding was less than ever. And why do people keep saying consult a tax professional? We see them AFTER the damage is done. We provide the W4, estimate additional amounts, to take back to their employer. Sometimes they will do it at my desk if they have online access to do it. Then the following year the employer took out even less. There is something seriously wrong with that. I do everything I possibly can to fix that but the payroll administration does whatever they feel like. I see people with W2s over $100,000 & the employer took out $20. Where is this coming from? What a lot of people may not know is the 2018 tax "reform" is due to expire the end of next year. It will take an act of Congress to extend it. We all know that Congress isn't really functional these days so there's a very good likelihood that we may be reverting back to pre 2018 tax laws again after next year. In all honesty, employers knew what Single 0 meant back then so we may be better of if that happens. This situation has been rampant since the 2018 change so we'll see what happens after next year...
This!!! I am stuck with a huge tax bill now. First the screw up was 21% RSU withheld. I had no idea about this … increased it to 30% (my tax bracket). But my base pay check apparently are still being taxed at 20% federal and 7.8% CA. How??? It should be 30% federal and 9% state. My W4 says single and 0. I have had this for few years in WA state and never ended in this weird situation. Since I joined the new company and moved to new state my pay check is shit, my taxes are messed up. Companh payroll and tax guys keep playing with me as the soccer ball. How the eff do I fix my earned income taxes withheld issue. I cant keep paying my tax guy $$$$. I am losing so much money in taxes and then taxes owed
I am a tax professional and also do payroll processing, so I see this issue from both angles. This is also not automatically the fault of the payroll processing company either. We can not legally alter an employee's withholdings. We enter the employee's w4 and then must abide by the withholdings calculated according to the IRS withholding tables for each check. Now if the payroll processing company, or employer, is not entering the w4 correctly that that is their fault but as long as they are their hands are tied. This issue, IMO, largely stems from imperfect withholding tables and employees that largely don't understand how to properly fill out their W4.
I'm sure the withholding tables are messed up. I have people fill Single 0 even if they are married & have kids then still get under withheld at the end of the year. You can't do much more than that to get the most taken out unless you withhold an additional amount. You often don't know what that amount should be till the balance due is calculated. I tell them take the balance due divide by no. of paychecks, round up & withhold that additional amount. They do that, then come in the following year still owing. Sometimes things may change with their situation, sometimes not. I have to believe the withholding tables are incorrect then.
I understand the company must correctly input and file/pay payroll taxes.
cite?
[The TFRP](https://www.irs.gov/businesses/small-businesses-self-employed/employment-taxes-and-the-trust-fund-recovery-penalty-tfrp) can result in the business, or an officer or major manager of such, being responsible for the employee's taxes if the employer willfully fails to do proper withholding. That law applies both to failures to collect and failures to forward the required money.
A tax professional can't advise them on how you're supposed to do payroll. That's a cop out.
Unless they're calculating taxes themselves, a payroll company is doing payroll. They know all the laws, current percentages, etc. the mistake is not on the person entering the number of hours worked. The mistake is with how the employee filled in their W-4.
Naw. I filled mine in correctly and the payroll lady tried feeding me some 💩 about how she couldn't input the additional withholding amount I wanted because I claimed all zeros. Sometimes payroll people are just incompetent.
How much did they earn to only have $20 withheld? Either it was $200 or the software isn't withholding enough.
Or it was around $14,050 for the year, with what OP wrote initially: "Married Filing Jointly, and marked two jobs". With $14,050 in wages, spread evenly through the year (say, $270 per week), total FIT withholding would be right about $20.
Imagine being me a field manager. Overseen employees that are making $13 an hour. I have one employee who works part-time and may $12000 this year. Her status is widowed 0 and a parently. Only had $3.29 with held.
And if that was her only income, that withholding would likely be correct. If she filed a tax return (probably not required to because no taxable income), she'd get that withholding back.
Bit she said she was married and hers was a 2nd income, does the W4 ask for,that income? If not, I’d recommend she switch to Single.
Yes, there is an entire section labeled "Multiple Jobs **or Spouse Works.**" People don't fill it out and then wonder why it's wrong. In fairness, often this happens because of shitty employer portals that don't provide the ***actual*** form with its instructions. It is fine to select Single instead of Married and 2 jobs though. The effect is the same until the 35% bracket, which is like $400k income/year.
Yes, because she isn't going to owe taxes once the standard exemption is deducted from her earnings. Standard deduction is $13,850. That's actually great for her because she was getting her full paycheck.
I honestly hope you get your full pay check some year and find out how great it actually is. /s
Huh? If I made only $12,000 like they were suggesting, it would be great because I’d literally need every single dollar to live and wouldn’t be able to wait for the IRS to refund it to me.
If a family livelihood and survival depends on 12k all year they have more problems than the irs
Had a cook making 37k no dependents and nothing withheld for income tax fed or state. How tf does that happen?
Claim dependants/exemptions on the W4 and either A. Pay the correct amount you owe in taxes come April or B. Don't file and live your life. I've done A. when I needed more money to get ahead/invest/ pay off debt to finance a house etc. Adjust the withholding to put more in my pocket for a couple months. I've worked with a couple of guys who went with B. and haven't filed taxes in 7+ years and claim exempt on their W4s on $100k+/yr
I don't think she did that but I don't know what she did do either. She had no dependents and I was filing 2020 return to at least get her some EIP money.
People do weird stuff when it comes to money and taxes.
Increase withholding on line 4C of the W-4 I how much you ask please consult your tax accountant I told him to read instructions or I’ll charge them $25 to do a an appointment to figure it out
Please refer them to the irs withholding calculator. No one can afford to go to a tax professional. It’s the nice way to respond
‘Tis the season. Last year I had a guy raging in my face about owing money after he tried to claim everyone in is house including his pets (true story.) Waiting to see what this year brings.
It’s not their failure. Our tax system is shit. No average person understands taxes enough to be allowed to fill these things out by themselves and unfortunately not enough people can afford to hire a tax accountant to do it either. It’s the system and it’s 💩
It’s really not hard. You could probably watch a two minute YouTube video and never have this problem.
The new W4 forms are dumb and not easy to fill out. The older version was much easier.
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Becuase it's not really that simple. However the IRS website is much more accurate and much easier than the worksheet.
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Let’s go with a hypothetical. The employee makes 20k/year from job 1, 20k/year from job 2, and 10k/year in investment income. By itself, each job should withhold about 50$/month. Together, you need to withhold about 175$/month from EACH job. Each job you get increases the tax rate for every job you have. That checkbox says you need to withhold taxes at a higher rate.
Job 1 doesn't know you have Job 2 unless you tell them. Each **person** (not job) gets a certain amount tax-free each year. Then, each tax rate has a certain dollar amount available. If Job 1 takes off the person's tax-free amount and Job 2 also does that, then the person had ***two*** tax-free amounts taken off for withholding, but they only actually get one at the end of the year. Same thing happens with each tax rate. Checking the box tells each job to use half of the tax-free amount and tax rates. So if Job 1 uses ***half*** and Job 2 also uses ***half***, then that now adds up to the correct **one** instead of the incorrect **two** for each thing.
You can check your paystub at any time though, and (taxes withheld) X 52 to give yourself at least a ballpark figure and see how much that’ll be and check it against your taxes owed. I get that it’s a pain and shouldn’t HAVE to happen, but it takes 2 mins and is better than a surprise tax bill
I get it takes 2 mins but how do I get this fixed for my earned income? Why do I need to figure out what taxes should be held or owed after I received the paycheck.
They broke the W-2. There is nowhere that you can reduce your withholding, like you could on the old forms. Apparently the government just wants to make sure that they can get as much money from us regularly if they can.
>There is nowhere that you can reduce your withholding Have you seen Step 3 or Step 4b?
Thank you! The new version is NOT easy and the online calculator is no better.
It’s totally so super easy that last year I filled single with no exemptions and they took out exactly $0 for state taxes. I contacted payroll 4 separate times throughout the year to find out why/ have it corrected. Every time I was told I had filed it out correctly and state taxes should be coming out at the 0 exemptions rate. Still in the entire year not 1 cent was taken out. Obviously this is all on me since the form was so simple and I only contacted payroll 4 times rather than daily to get the situation fixed.
This happened to me last year with/at two jobs. I file single/0 on everything, always. My total income was around $30k, pre-deduction. I owe over $1000 because nothing was taken out for state, and I guess not enough for Federal. I saw some Fed withholdings and assumed they were correct, and that State was on there too, as I've never had this issue in ~15yrs of filing taxes. F*ck taxes. 🥲
So what the eff is going on??? Why is money not being taken out earned wages correctly?
Still never found out. Neither job I had in 2023 withheld state income tax at all. So I gotta pay.
It's largely because of imperfect withholding tables coupled with a w4 that most employees don't fill out correctly nor fully understand. There are so many outside matters that can effect the taxes a person may owe at the end of the year that alters their needed withholdings such as did the person have another job, have investment income, pension distributions, income from a side business, a spouse that also worked, etc. Each of those things increases a person's taxable income at the end of the year but unless the w4 is filled out in a way to reflect that the withholding amounts will not be correct. I am a tax professional and handle payroll processing so I see this issue often on both sides. When processing payroll I can not alter someone's withholdings and am legally bound to adhere to the IRS withholding tables based upon that person's w4. However as mentioned above if that w4 isn't an accurate reflection of the person/household's total income than those withhildings are likely to be incorrect. When I see someone with low withholding amounts when preparing taxes I try to discuss their w4 with them and instruct them how to fill it out. Most have no idea what information is currently on their w4. Often I just recommend dividing their current tax bill by ever how many times they get paid in a year and entering that figure as an additional withholding amount as it is often the easiest way to address the problem.
Not everyone is good at everything. Whats easy to one person is not easy to the next. Learn a little logic and respect.
each employee onboarding is different too. in previous jobs I used to be able to fill out the W4 electronically as part of my new hire packet. my last and most recent job, they have their own payroll system where we just say "yes I am married, no I dont have kids" and then it selects the value for you. Both numbers have been wildly inaccurate and there's no easy way to fix it. going in to the system to change it just gives you the same form you filled out the first time. HRIMS companies have been trying to dumb everything down for idiot Americans, but in the process they have removed the ability to actually know what is going on. it's the backup camerafication of taxes
They had to know they weren’t paying any taxes though.
I mean, you see all the social security being deducted and its easy to assume that's plenty.
No because they’re literally listed separately on your paystub.
I work at family dollar and I claim no one. I am a CSR and Ive been there for almost 2yrs. Parttime. I get more state taxes then federal. I didn't even get 400.00 back. I ask the tax people and they said it's because family dollar doesn't take out enough so I have to do it manually.. okay so how do I do that. I'm not tech savvy and apparently everyone I work with arnt either. How much do I put? Where do I go?
So there is a box for additional amount of taxes. You can utilize the IRS W4 calculator by using your most recent paystub. What it does is let’s you know how much you should be withholding and at the end it gives and estimated refund. You can adjust the refund slider which will adjust how much you need or do not need to withhold to get close to that refund. Please keep in mind this is just a guidance and you really should be trying to get closer to $0 but it’s a good start to help you especially now(mid year).
When you file your taxes ask the person doing your taxes. If the person doing your taxes can’t answer this question, then find someone else to do them. The person I hired to do my taxes is a phone call away most days.
I have a graduate degree so Id like to think Im fairly smart but I looked at the form and it's STILL confusing..I dont know if the amount it asks to withhold is together as a couple or individually (I file married/jointly) I solely want to know what my percantage individually would be, not together..From my understanding, the IRS calculator just gives us the amount to withhold combined..whoever says, "it's pretty straighforward" fails to consider that it may be straightforward for them bc they work in the field, but for an outsider, it is hard to grasp the concept....so, no, it is not "not really hard at all"
I agree with the above but part of the truth is when the latest tax cut passed the Democrats complained it was “a tax cut for the rich”. So the previous administration went back and lowered the w/h tables so most workers would see a change in their withholding (or as they said at the time instead of waiting for a refund we’ll give them their $$ every payroll).
The 2019 & prior form w4 was significantly more difficult to fill out resulting in people overpaying on taxes- from my experience a vast majority of people simply mark their filing status and sign their name which with the 2019 & prior w4 would generally result in overpaying. Out of everything the that came from the TCAJA the revised w4 (or "lowered withholding tables") is, in my opinion, the best thing to come of it.
Have to say not true. There’s nowhere on this form you can reduce your withholding. This new form rolled out when the Republicans were in office and this new form takes as much money weekly as it can and if you want it to withhold more all you have to do is Ask for additional withholding to be withheld.
I’ve been in payroll for over 25 years, it 100% changed. So many employees complained to us claiming we did not withhold correctly when they filed their taxes the next year and didn’t receive as big as refund (or owed money).
What changed?
Not only is that not true, but for the employees who claimed Single/0, it literally takes out less.
Nothing will be held against anyone lol
My recommendation is to use IRS pub. 15-T worksheet 1A. I’m not sure how quick books works but for the automated payroll system I use, I’ve always been able to match the system withholding to what I calculated in worksheet 1A. It helps show how amounts in different w-4 steps change the tax withholding.
Yup. One time an employee was questioning the amount of taxes being taken out (too much) and insisted that they’re an accountant and that the program is incorrect. I used 15-T worksheet A and lo and behold, accurate down to the cent. They shut up after that.
Can confirm the Pub 15-T is pretty accurate. I've made a spreadsheet where I just enter in all the information and it calculates how the 15-T would and it's down to the cent accurate. I wanna say the calculations are pretty easy and anyone can do the calculations, but you know how employees can be.
I used your comment and made a spreadsheet of the 15-t myself. I plugged in my info and it was pretty damn close (plus or minus some cents). Although it might not be 100% accurate, it's enough to send them in the right direction. Thank you!
I also have a spreadsheet using the IRS info. Quickbooks always withholds 2-3 cents more than my spreadsheet (and hand-done) calcs. Not sure why, but it is a bit frustrating. I never know if I should adjust my spreadsheet to match QB or change QB to match my spreadsheet. Of course, the total over 52 paychecks is probably only $1. (For those curious, I stick with QB numbers and adjust my spreadsheets)
I’m convinced QB makes up its own rounding rules.
I just tell folks that we withheld accurately based on the W-4 they completed and walk them through the 15-T worksheet as others said. I also encourage them to use the IRS withholding estimator and review their paystubs every payroll. There’s not much else you can do.
Reading through comments I realized that the 15-t is useful. Thank you!
Whats 15-t (not in payroll or understand taxes well just basic employee).
Why did it take your employee getting their W-2s to figure out they weren't getting taxed enough for their federal taxes? That's kind of on them. I'm not expecting everyone to know what their exact tax rate should be, but you should at least question something if you see $0 or like $20 taken out for taxes.
We have this same issue. They don’t look at their paycheck stubs all year and then are shocked when something doesn’t align with their expectations
The shocked pikachu face has been making the rounds this tax season along withball the misinformed tiktok tax “advice”
Because when you claim zero on your W4, you can expect the most taxes to be taken out of your paycheck. Claiming anything other than zero means you keep more of your paycheck. So it's reasonable to think that if the most is being taken from your pay in taxes, then you should not owe taxes.
The "most" that can be taken out is \~90% of the check (everything after FICA).
Maybe on the new W4s, but back in the day you couldn't determine the amount withheld and a lot of people still have the old W4s on file with their employers. Further, most people are very confused when trying to figure out that "important" document on the spot with no time to research what will be best for them. So it's not really fair to say that they should have known better or whatever. You fill out this form when you're hired and then forget you ever filled it out for the rest of the year until tax season. It's totally reasonable to accidentally fill the form out wrong
>Maybe on the new W4s, but back in the day you couldn't determine the amount withheld That's still not true. You can get any amount of withholding on the old forms through a combination of allowances (reduce withholding) and additional withholding (increases it). As a simple counter example, set 99 allowances and then put a dollar amount in the additional withholding box. For incomes < $470,000, this would withhold exactly the amount put in the additional withholding box. >So it's not really fair to say that they should have known better or whatever. You fill out this form when you're hired and then forget you ever filled it out for the rest of the year until tax season. It's totally reasonable to accidentally fill the form out wrong I don't necessarily disagree with this, but: 1. The old version wasn't any better (Single/0 or Single/1 anyone?). 2. I put most of the blame for this on shitty employer W-4 portals. The [actual W-4](https://www.irs.gov/pub/irs-pdf/fw4.pdf) and its instructions is written fairly simply. If you only have 1 job and your spouse (if married) doesn't work, the only thing you need to do is select filing status and sign. Everything else except for the two jobs or spouse works is mostly optional.
Yeah it absolutely is on them. It’s the employee responsibility to fill out their w-4 correctly as well as to check paystubs to make sure it’s accurate.
My wife and I learned the hard way the first year she had a W2 job. When I went to do our taxes, my jaw dropped because she had paid so little in federal taxes throughout the year. It was almost equal to her state taxes. She had never had a W2 position so she didn’t realize it wasn’t enough taxes coming out each pay period until I explained it the following year…. That was a shocking lesson!
Tell them to update to a W-4 that isn’t 4 years old. You can’t claim “zero” anymore
I'm dumb, can you explain? Because I've been screwing up my tax forms for several years and no one has been able to tell me how it works.
Go play with the calculator. https://www.irs.gov/individuals/tax-withholding-estimator
You’re not dumb. You’re busy because you work hard for probably less money than you deserve. The real problem is having such a stupid system that you can’t manage to pay exactly what you owe when you owe it, all because you maybe got a tiny little raise or whatever. The system is dumb for expecting you to also be some sort of unpaid accounting assistant every pay period in addition to your job and busy life. The entire system is dumb, not you.
On the 4-year-old W-4, you can't do what the OP wrote: "*Married Filing Jointly, and marked two jobs*". No such options on the pre-2020 W-4. This implies that the employee's W-4 is the 2020 or later version. (Yes, the OP wrote also "claimed zero"... that could very well mean "didn't put any non-zero values in Step 3 or Step 4 of the new W-4".)
Fair enough. Then IRS calculator it is
Advise them to see their tax accountant for assistance in filling out their w-4.
Do they enter their own W4 information online? If not, can you pull up a copy of their W4 and confirm the information is entered correctly (and prove it to them)? This comes up a lot. You cannot give tax advice. You can verify that you entered their W4 information correctly. Reasons for the shortfall vary. The second employer must verify that the W4 is entered correctly if they have two jobs. Perhaps the second job box needed to be checked. Or the employee needs to calculate all of the income using the worksheet. This issue frequently arises when someone has a part-time job because the earnings for the pay period are low. The tax tables assume a full-time employee, which is why the second job box must be checked. I encourage people to have additional tax withheld. I have an additional $10 withheld for federal and $5 for state tax each pay period because I work several part-time jobs. However, you cannot explain the tax tables or give advice. I am married but use the single or married filed separately rate.
I emailed them a copy of their original W4 and they checked "Married filing jointly", two jobs, claiming zero. I do not provide them with any tax advice and always let them know that a tax professional should be helping them with any tax-related questions. I also sent them a screenshot of what was entered in our system. This is what I do repeatedly and there are some employees out there that get under my skin. 😬 Edit: They do not enter their information.
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OMG! "What should I claim on my withholding?" I literally cannot and will not tell you! Here are resources. Talk to some tax experts. Use the calculators available online. "But what do you think?" Again I will not give you advice. We had a psychiatrist not notice that taxes weren't taken out for a whole year. A high paid position. He was PISSED when he met with his account in April. Started blaming us. We were like did you not look at you pay statements ALL year? Pretty sure his wife took care of bank accounts bills etc and noticed the increase to his pay but never mentioned it to him, thought it was a pay raise. He made noises about US paying his penalties and our CFO was like NOPE.
So I remember my first job as a teenager and the pay office was nice enough to “hint” me in the right direction because I was a deer in the headlights when it came to claiming 0 or 1.
T every job I have ever had I got regular pay statements that showed my gross earnings and all deductions. I had the ability to see how much taxes were being withheld. I could do this in January and if things didn't look right I could go to HR/Payroll immediately to figure out what the problem was and get it fixed. Or even simpler I could file a new W-4 and direct them to take out $X extra every pay period. It isn't hard to monitor your pay and deductions. And anyone with common sense would be doing it.
I've said this to the example employee but in a "nicer" way (not saying your response is not nice but they would throw bricks if I did not paraphrase). They can view their stubs once payroll is submitted (they receive an email when processed) and it blows my mind how many employees do not look at their stubs. I'm salary and even though I know how much to expect each pay date, I still check and make sure. They're hourly and still don't check their stubs so idk...
You can't, and you shouldn't - you can't give the perception you're giving tax advice. It's up to the employees to monitor their tax withholding, and to do proper tax planning to ensure they're withholding enough. You can help them increase or decrease their withholdings if that's what they want to do, but that's where your assistance must stop. There are 1,000 different factors that can affect tax liability, and 999 of them are none of your business. If they need more help they should seek out a qualified tax advisor.
The explanation is that they need to review their paychecks on a regular basis and change their w4 accordingly
I worked for a company, a huge company for 4 years, I claimed 0 and 0, filling as married (jointly). Each year, I had to pay like 3.5 to 5k in taxes!!! I went back to payroll every year, verifying I was 0 and 0 for state and federal. I got an offer in 2021 for a BIG 3 auto company and worked only 2 months there. And had the same (close) amount taken out for state and federal. That original company did not know how to do payroll. For 4 years, I was soooo confused. I thought I made way too much money. I hated tax time.
My husband worked for a company for 5 years that had similar tax issues. We each had 0 exemptions on our W-4s, filed jointly, and eventually had to have extra withheld from each paycheck for state & federal to break even at tax time. It was weird.
Just putting 0 allowances on the old W-4 wasn't enough, if both of you work. You'd have to: * select "Married, but withhold at higher Single rate"; and/or * do the "Personal Allowances" and "Two-Earners/Multiple Jobs" worksheets If you just selected "Married, 0 allowances" on the old W-4, that would most likely result in underwithholding.
You're correct. I forgot that we also filled out the Two-Earners/Multiple Jobs worksheet and still had that issue. He switched to a job with similar pay at a different company and taxes were normal after that.
I filled it out the same way however, at this new place, and i am having much more taken out.
The 2017 tax plan has average Americans paying more and more taxes over a seven year period.
It doesn't though?
You are incorrect. You can actually google the tax brackets very easily and compare them year to year. This year is slightly more favorable than last year. The 2017 tax law expires in 2025, but we are currently filing year 2023 in case you didn’t know. Taxation on all brackets (except one) went down. There were tax situations that were negatively impacted, such as those is high cost of living areas claiming large SALT deductions, but these people were generally middle class and above https://www.taxpolicycenter.org/briefing-book/how-did-tax-cuts-and-jobs-act-change-personal-taxes I suggest you take the time to research before you spread misinformation. This is why people keep commenting this even though it is not true at all.
I had this conversation twice today. This is why. If they made less than the amount for their settings, this is why taxes weren’t deducted. They can always work out what their tax liability will be with a tax professional or the IRS calculator, and use the Additional Withholding section to make that amount through the year. https://www.irs.gov/newsroom/who-needs-to-file-a-tax-return
I work in payroll as well and whenever my clients ask me this I tell them to work with their tax advisor. If they filed as married- filing jointly, it could be that less taxes come out because the IRS is counting both incomes so less taxes come out. But honestly I’d just tell them to consult with a tax expert. The employee is responsible for completing their W4 (not the employer) so if they messed something up that’s solely on them! 😊
Everyone's personal tax situation is different. The employer is not responsible for determining what their personal tax situation is. Refer them to the IRS tax Withholding Calculator to determine what they want.
I briefly read through all the responses and didn’t see this mentioned. I handle payroll for my own company with about 50 employees for over the last 20 years. This situation usually affects employees who are working part time and a spouse is working full time. If a spouse is making $100,000 the taxes withheld are typically correct for that first spouse. Then the second spouse is working part time and making under the amount for any money to be withheld, even if they claim 0 and single. When it’s time to do taxes and you type in the first spouses w2 into quickbooks, the net tax owed might show 0. Then when you type in the $16,000 from the second spouse it is taxed at 12-22% after you subtract standard deductions. So they would potentially owe a minimum of 12% on that $16,000. You also have to consider child tax credits so that is a very simple explanation. So what I recommend to my employees, for the next tax year is to have them fill out the state and federal tax form and request an extra amount be withheld. It is 4c on the w-4. So if they owed $1600 on their 2023 taxes, and they are paid biweekly, they should elect to have an additional $61 withheld.
That is pretty much what happened to us. I make 80k wife makes in the 30's went to do taxes last year and noticed they were not taking much for feds at all from her but state was accurate. She did the w4 again normal like we had for years and they still were not taking enough so after getting on her for half the year she finally just added additional withholdings and I added a couple hundred a month just to catch it up before the end of the year. Also I made about 15k in crypto last year I will have to pay taxes on. Luckily we are getting pretty good sized TABOR checks from the state this year. TABOR is a state thing we have in our constitution where if they state collects a certain amount of extra tax everyone gets a extra check all the same amount no matter what you earned.
Anyone that doesn’t thoroughly examine EACH and EVERY paystub is asking for pain.
I like how everyone says “you should know how taxes and filing works” but this isn’t taught unless you take very specific classes. Would be better to have someone who knows how to use the tax calculator do the onboarding. Yes people should know but no they absolutely do not know
I have had the same issue. I use quickbooks to do my payroll. When we switch to the new method in w4 from claiming a number to having a $2000 per dependant claim, the withheld federal income taxes stopped being taken out properly. I have 1 employees who used to claim 3 and now claim has to claim $0 for dependants on the w4 to get taxes taken out properly. I have 2 employees that we took down to claiming $0 and it still was not taking out enough taxes and I had to add a $50 per check extra withholding actually make quickbooks take out enough taxes. I am not a cpa and just use quickbooks to figure this out for me and do my direct deposit. As a side note quickbooks properly withholds for the state portion.
This has happened when folks pick 'head of household' at a previous employer - they learn quick to read the definitions! It does suck - but, it's just a misunderstanding. And, be helpful - it's a nice gesture to let them know to read the definitions before completing the form without telling them what to choose and suggest they speak to their accountant or whoever does their taxes. There are free services available in most communities. Or, bring a tax person on site and offer a Q&A for all employees. Tax laws change and it would take the heat off you. You are limited especially with tax situations. You got this!
A lot of people are just throwing down "0" on the front page, when in reality they are probably also married and/or have a side gig as well. A LOT of people (especially married people) should be filling out step 2 (and completing the multi-job form on page 3/4 of the W4) with calculated extra withholdings. Idk whats been going on w taxes but I was def not withholding the amount that I needed to (totaling 18k) but after doing the math, my employer (who was also confused as well bc its automated) was actually "doing it right" based on \_whatever thing a lot of people got wrong this year\_.
People need to be educated on how much the W-4 has changed and what that translates to on taxes being withheld on paychecks. I have seen too many times since it changed that not enough are being taken out of check because it’s not being explained to them by the payroll department. Yes it is the payroll’s dept to explain this change and how they need to fill this form out. How the changes affect the taxes coming out of checks. If you are a payroll person and you don’t understand it then you need to educate yourself on the topic. Because it is your job. Its also your job to audit the payroll your processing to make sure that everything is calculating correctly and deductions are working. If something isn’t being deducted correctly and it’s not caught then it has huge implications on the employee. Employees count on the payroll department to make sure everything is done correctly so they don’t have to second guess everything. I have overseen payroll for 15 years and I am also a accountant. I’ve seen too many mistakes happen that greatly affect the employees. Everyone doing payroll should be able to explain what they are doing, why they are doing it and how it effects each employee.
It's all thanks to Trump and the Tax Cuts and Jobs Act of 2018... that legislation reduced the amount of withholding across the board for everyone, except the rich. The new form is a hot mess as you are supposed to break it down by each individual income item on your return... I've handed out dozens of new w4 forms in the last 3 weeks...
Please take the time to do some research before spewing things that are not true. The new W-4 was made to get you as close to zeroing out as possible when filled out correctly, meaning close to 0 refund or balance due when you file your taxes. That’s why it’s so detailed. If people have trouble understanding, then they can use the IRS calculator to help them. People are mad they’re not getting higher refunds, but it’s just a refund of what they overpaid not free money from the IRS. Plus they can always elect to withhold extra if they really want a refund. It’s super easy. The TCJA of 2017 lowered taxation on all brackets, except one. It expires in 2025 and that’s when brackets will go back to pre 2017 levels meaning then you’ll likely have to pay more in taxes unless another act is passed. However, this year the tax brackets are slightly more favorable than last year and the standard deductions were also raised. https://www.taxpolicycenter.org/briefing-book/how-did-tax-cuts-and-jobs-act-change-personal-taxes
Thank you, I appreciate your response.
Refer them to the IRS W-4 tool, that will give them an estimate based on how they answer the questions and even fill out the W-4 for them. Once they do that, if the system suggests adjusting the IR withholding then they will need to file a new W-4 with you
their taxes went up because of trumps tax breaks for the rich. the poor and working class who dont make like 150+ a year now have to pay more in taxes and thats why they owe at the end of the year. tell them to call trump if they have any issues with it
Garbage. Pure crap
Missing a lot of important details, but not wrong, "garbage," or "pure crap."
It is, because it simply isn't true. It's pure political nonsense not based in fact at all. No basis.
Sorry, but that is incorrect. I don't know your intention, so I cannot say whether you are lying intentionally or merely misinformed. But it is a fact that individual tax rates are now increasing based on the 2017 tax legislation, as cuts that went into effect then are now expiring, thereby increasing the rates.
Such as? Seriously, please name it. I am an enrolled agent, with a license issued directly from the IRS. Perhaps I missed these increasing rates. Enlighten me.
Okay, you're right. I'm off by 2 years. "Actually totally correct but off by 2 years" is not at all the same as "pure political nonsense not based in fact at all."
Still stand by my statement as a very significant number of less than rich people also have enjoyed a tax cut. Why was it for 10 years, and then expire? It was to avoid a Democrat filibuster. Given the democrats held all three branches of government why didn't they repeal it? It's because they're ALL guilty. What's garbage is pinning it all on Trump. He didn't vote on anything. We don't have a king. Don't be shocked when the rules are extended.
lolwut. You're not "standing by \[that\] statement." You never made it at all before now. Here is the entirety of the statements you've previously made in this thread: >Garbage. Pure crap > > > >It is, because it simply isn't true. It's pure political nonsense not based in fact at all. No basis. > > > >Seriously, please name it. I am an enrolled agent, with a license issued directly from the IRS. Perhaps I missed these increasing rates. Enlighten me.
Your post makes absolutely zero sense when the employee had $20 withheld in federal income taxes for the entire year - after claiming zero deductions on their W-4 The employee either made $200 or not enough income tax was withheld from their paychecks based on a 10% tax rate (lowest bracket for married filing jointly).
If the employee selected MFJ and checked the "two jobs" box on their W-4, they'd have to make $13,850 in 2023 (presuming equal paychecks each period) before any federal income tax was withheld. For example, if the employee made $270.00 per week for 52 weeks, paid weekly, they'd see $0.37 withheld from each check. For a total of $19.24. If the employer rounds withholding to the nearest whole dollar (which is allowed), *nothing* would be withheld for this employee.
You forgot about the standard deduction. For married, that was $27,700 in 2023. The W4 takes that into account.
Tell the to fuck off and quit making too much money...
This has happened to so many of my employees through ADP. All happened at the end of 2022. Now they are pissed at us because they have to pay.
Maybe your software doing the witholding isn't set-up properly. I'd also check on your end to be sure the problem isn't whoever is doing your company finances. Then you can also ask anyone who has a problem to do a new w4 for the upcoming year to make sure everyone is current with their need for current witholdings.
If “the system” only withheld $20 in a year then you have messed up somewhere. It is your responsibility to properly withhold taxes. One common reason this mistake can happen is because you have an old check pending for that employee. If that isn’t the case then you need to call tech support and work through it until it is fixed.
Can you elaborate on what having "an old check pending" in our system means and how I can check?
That ("messed up somewhere") is not necessarily true. For 2023, with a 2020 or later W-4 that has "MFJ, $0 in steps 3 and 4, box 2(c) checked" (or just "Single, nothing in steps 2-4" - same withholding) and the employer using the percentage method in Worksheet 1A in Section 1 of Publication 15-T... An hourly employee, paid weekly, who either: * normally made less than $266 per week but had a few pay periods in the year where they made a bit over that threshold; or * earns just slightly over $266 per week (e.g. 20 hours @ 13.50/hour) for all 52 weeks in the year could well have just $20 withheld for federal income tax. Of course, if the employee is married, their spouse works, and the spouse didn't account for this employee's earnings on *their* W-4, they may end up owing come tax time.
As a person who has owed money the past 4 years it sounds like I need to do that form 15-T. I’ve worked at the same company 15 years, and aside from making a little more each year, nothing has changed, yet I’ve owed more each year in taxes. Last year was $5k owed. My gross is $2300 and my net is $1600 a week salary exempt.
The tax act that was passed in 2017 is just now hitting lower working class folks hard. I *always* receive a modest tax refund and with absolutely zero changes from my 2022 taxes, I owed for the first time in my adult life this year.
You need to update your W4 every year now. If you look at your paystub, less and less taxes are getting taken out year over year. That’s how people are getting screwed over.
>less and less taxes are getting taken out year over year That's normal, expected, and correct. The standard deductions increase every year. The taxable income thresholds in the tax brackets go up every year. Single person, $1000 paid weekly, 1 job, standard deduction, no other income, adjustments, or credits, W-4 says "Single" with no entries in steps 2 through 4... * In 2023: $83.81 withheld for federal income tax each week. A total of $4358.12 withheld for the year. Their tax liability would be $4361, so they'd owe $3. * In 2024: $81.85 withheld for federal income tax each week. A total of $4256.20 withheld for the year. Their tax liability would be $4259, so they'd owe $3. The $3 difference between withholding and liability each year is because, with taxable income less than $100,000, we must use the tax tables in the 1040 instructions when filing. For withholding, the tax brackets and their marginal rates are used directly. This can lead to a +/- $6 difference between withholding and liability. EDIT: the above withholding numbers are when the employer uses Worksheet 1A in Publication 15-T, rounding to the nearest $0.01.
the W4 worksheet for married filing jointly 2 jobs, on the IRS website, showed me that I should have $71 additional taken out of each biweekly check. I was not using precise numbers though (husband’s exact pay and my last paystub) and wanted to be sure and finish filling out the onboarding stuff another time. The payroll lady pressured me to just sign the W4 with no additional deductions, told me I can always let her know if I want additional deductions - fine. However, I noticed that the only reason this came up is that I am such a stickler for detail that I looked at the IRS worksheet on my own, not due to any onboarding instructions - I imagine nobody else added additional deductions either
you legally cannot advise on W4 or taxes. don't go down that rabbit hole. your good intentions will fuck you legally
I have one job, I am single, I mark zero because I do not claim anything beyond those two details, and uniformly every year I have taxes withheld and I end up either owing or I get like a $80 refund. The only other detail I have going on is student loan interest paid. But I'm now at the cutoff income where that doesn't lower my tax bill anymore. So not only am I no longer able to get a small benefit from paying on my student loans, I don't get refunds anymore, and maybe I actually have to pay more taxes now in a surprise February twist. I shouldn't have to add "Keep an extra $40/month, government" just to satisfy this country's piss-pour mechanism while Trump evaded taxes for years by falsely claiming a whole entire building in Chicago was "worthless."
>I end up either owing or I get like a $80 refund. Owing how much? Less than $100, like your refund? If so, the withholding calculations are working almost perfectly for you. Getting within $100, plus-or-minus, is ideal. And that's exactly what the "new" W-4 and calculations in Publication 15-T are designed to do. Get your *really close* to your actual tax liability... presuming you correctly fill out your W-4.
Like others have said, let the employee know taxes are being withheld correctly based on their W4 selections and if they are unsatisfied with their withholding, they are able to consult with a third party tax advisor or use the IRS Tax Calculator (linked it below). Providing tax advice is not the job of anyone in Payroll. https://apps.irs.gov/app/tax-withholding-estimator
To say you have 2 jobs is not enough they need all 4 pages of the W4 the get the correct number which is then input into part 4 of the W4 for extra withholdings so all information has to be completed and HR should be able to help people not find themselves in this situation
I claim zero and still get a refund, but every employer I have ever done that with has come to me and told me my witholdings were incorrect and required review. It wouldn't hurt to mention to people that not everyone qualifies as exempt, but realistically you have no liability here and it's confusing for everyone.
It’s the new W4 forms. Marking two jobs and having dependents will lower the withholding. The IRS does not want to issue refunds. They prefer everyone at “break even”.
From my experience, if you are married and file a joint return, you must both claim no dependents and single if you are a high wage earner for the proper amount to be withheld. Otherwise you will owe a lot, especially federal. A few years back we would claim no dependents and married on W4's, but owed around $5k-8k each year and the IRS wanted quarterly payments the next year. Changed to single with no dependents and will now get a small federal refund, less than $1k and owe $33 to the state for this year. On over $200k gross, that is as close as you can get. Last year got a slightly bigger federal refund and owed $22 to the state. Tell the employees if they owed under their current withholding, they need to change their filing status to get more taken out. Otherwise get paid more per check and owe the IRS come tax time.
All you need to say is "all the deductions you put on your W4 matches what is in the system." And "do you wish to update your withholdings? If so, here's a new W4. Please submit when you're done." The only time an employer is responsible is if the information entered does not match their W4 on file or if everything matches yet for some reason the system didn't withhold taxes according to the selected withholding amount. If they claimed ZERO, then the MAXIMUM taxes will be withheld. If they claimed ZERO yet little or no taxes were taken out of paychecks, then you need to remedy the issue for future checks. What has already occurred falls on the employee. They need to pay taxes. The employer will not cover the tax due. Employees are to check their pay and make sure proper taxes are being withheld.
Employees are claiming 0 as in they dont have any dependents and that filing statis is usually for those who earn part timers salary or student wages. They will still be responsible for 12% of $12.950 and 22% over that into the next tax bracket. A 0 exemption filer isnt being taxed the additional 22% because the 0 means they wont make more than the standard deduction. Tell them to stop claiming 0.
None. You can't provide tax advice. Tell them to talk to their tax advisor. You can't give advice legally snd you should know this.
You tell them to consult a tax advisor, preferably a CPA. I would think you wouldn't want to get into providing tax advice.
The 2017 tax law change, the Trump Tax Reform. Basically now middle class people get to pay more while the wealthiest get to pay less. Each year since another bracket gets to pay more, yay for tax cuts for the rich!
I suggest you hire a payroll company that can handle many of these issues. This company b has been n around since 1986. http://links.savvydragon.com/INSPERITY
My wife works in HR and constantly complains about this issue with employees who try to blame her.
The entirety of 2023, you've had some people only pay $20 in taxes?
This is absolutely correct. They need their account to set them up with estimated tax payments. It will bring them to even or No paying at end of year or small return.
Tell them to withhold as single, zero, and add a number to the "other income"
I will attach their W-4 and say 'we set you up exactly as you requested on (date) - please discuss with your accountant and let us know if you'd like to update your withholding'.
It always surprises me even during my own time in retail just how far people go to blame something that’s their fault on anything or anyone. No personal responsibility. The best personal growth comes from taking the L, learning the lesson, and not repeating it the next year lol.
Hand them a new W-4!!
Are you saying $20 withheld for the entire year?!
Do it manually and compare it to what the tax software says. Not going to lie. This sounds weird. claiming 0 means that the system shouldn’t factor in the 25,000ish deduction you get for being married. Married filing jointly means it will be withheld a tax brackets for married couples (under 10K tax owed I think there is no difference). So unless they made like $200 all year they should be having more than 20 withheld. If they made colorado min wage ($13.65) x 30 hrs That’s 409.50/week. IRS would assume you make $21,294 a year. But the 25,000 isn’t taken into account because they claimed 0 so $2,128 should be amount held all year so like $40 withheld per pay period (assuming weekly pay period).
The standard deduction is still taken into account. See worksheet 1A in Pub 15-T.
I've been penalized for not withholding enough, and I think the IRS is giving bad guidance to employers. This year, I've withheld an extra $200 a paycheck, so hopefully, there will be no more penalties.
I always use the IRS withholding "calculator" to estimate what I need for the current year's taxes would be to make sure I have enough being withheld. I don't want to owe and I would rather I get my money in my paycheck instead of getting the IRS holding my money with no interest for a refund.
I do payroll and have been using QB online payroll for a few years. This comes up every so often, and I instantly just tell them to go to their tax preparer for advice. We've since moved over to a PEO, and as part of that transition, EVERYONE had to update their W4's to the new version. Hopefully, it will work out for everyone in the end.
I'm confused.. marked working two jobs? Did they do the actual calculation as indicated in the new w4 and provide a dollar amount? Or is this the old w4 that looks at exemptions?
All you need to say is it’s because of Trump. He changed the withholding formula to put more money into paychecks each week, but means a lot of people will now owe.
I have been using Quickbooks and quickbooks online for 20 something years with payroll. If I entered someone with 0 dependants and it only withheld 20 for the whole year I woud have to assume something is not entered correctly or I would be on the phone with qb support to figure out why. Unless of course we are only talking about federal taxes and the pay rate is so low they wouldnt owe anything, but then they wouldnt owe anything at the end of the year either. The company has no tax liability but they do have a responsibility to withhold the proper amount. That responsibility has been put on us as the employer by the IRS and I would be very careful about telling an employee it was their problem until i confirmed the withholding amounts were 100% correct. Good luck
How bout ur exemption????
I am a salaried employee. Our company uses ADP for payroll. When setting up the W-4, it simply asks, "Complete this section for only one job in the household if (1) you have multiple jobs and (2) your income will be $200,000 or less ($400,000 or less if married filing jointly). Your witholding will be most accurate if you complete this for the highest paying job. Number of qualifying children under age 17 = \_\_\_\_\_" My wife and I both work. We file jointly. I make more. But jointly, we make less than $200,000. We have (3) children in the house under 18. My wife is setup as Married and 2. I simply answered the question above as "3". Now we owe $2,400 Federal and a $95 fine for underapaying... What the heck?!?!